Fiat To Buy Majority Stake in Zastava Automobili

After establishing a 1 billion euro joint venture in 2008, Italian carmaker Fiat announced it has come to an agreement with the Serbian government for the purchase of a majority stake in local manufacturer Zastava Automobili.

On paper, Fiat is the majority shareholder ever since last year. Yet, due to the economic recession, the 67 percent stake has not passed over to Fiat as the investment was delayed. For now, Zastava is still run by the government but, according to Fiat's CEO Sergio Marchionne, the final deal will be signed this month, making it perhaps the last transaction in the auto industry this year.

"By the end of the year, Fiat will make its first 100 million euro payment, while the remainder will be paid quarterly," Serbia's President Boris Tadic said in a statement quoted by Autonews.

The Serbian government has high hopes for the deal with Fiat and hopes to attract as many foreign investors as possible. For that, they look to Slovakia, a country which, in a little under three years managed o attract several major automotive players in the country, led by South Korean manufacturer Kia.

"Slovakia is a model we want to look up to," Mladjan Dinkic, Serbian deputy prime minister said. "And we can realize this if we ... cut the red tape and reform the public sector."

With the announcement of this final deal with Fiat, the doors for foreign investors are open. Although nobody expects investors to start poring in, the Italian money is expected to draw in additional small firms.
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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